Aim: Growth by investing globally in the equities of companies involved in mining and related activities
Minimum investment: Lump sum £1,000, monthly £100
Investment split: 100% in the equities if mining and related companies
Isa link: Yes
Charges: Initial 4.25%, annual 1.5%
Commission: Initial 4%, renewal 0.5%
Tel: 0800 727 720
JP Morgan Asset Management is drawing on its natural resources experience to launch the JPM global mining fund.
The fund invests globally in the stocks of 50 to 100 companies involved in mining or mining related activities. It will invest in firms that mine base and precious metals but not in firms involved in the production or extraction of oil and gas.. It will invest in companies of any size that can grow their reserves and production and will also include undervalued mining firms.
Chelsea Financial Services managing director Darius McDermott says: “It would be unfair to accuse JP Morgan of bandwagon jumping for launching this fund two years into a miners’ bull run. It is well established in natural resources investment and this launch is seen as building on that capability.”
McDermott adds that the firm’s highly successful natural resources fund, run by Ian Henderson, includes a portion of mining stocks such as Xstrata and Rio Tinto. It also has exposure to other commodities such as agriculture and energy but the new fund will focus purely on both base and precious metals. “The fund will hold between 50 and 100 stocks with a view to uncovering companies that display strong growth potential in reserves and production. For new investors, the question will be whether the sectors can continue to unearth double digit growth,” says McDermott.
Experience lies at the fund’s core in McDermott’s view. He points out that manager Neil Gregson joined J.P. Morgan Asset Management in 2010, bringing with him over 20 years experience in the natural resources sector. “He works alongside Henderson on the flagship Natural Resource fund and will be drawing from a deep resources and considerable bank of analysts.”
Adviser remuneration is seen as in line with other unit trust and Oeics, although normally such specialized funds such as BlackRock Gold and General, charge higher annual management charges.
Turning to the potential drawbacks McDermott says: “I think the fund is very suitable if investors want exposure to miners given the pedigree of the manager. JP Morgan as a highly respected investment house in this space.” But he adds that volatility is serious concern, as with any commodities investment. “ I think twin drivers of emerging market growth and the trend towards urbanisation makes a solid long-term investment case. The real question will be can this fund beat the pre-crash mining highs?”
Considering potential competitors McDermott goes for an investment trust. He says: “BlackRock World Mining Trust is the clear alternative. It has a slightly cheaper annual management charge of 1.3 per cent, as compared with the JP Morgan fund’s 1.5 per cent. It is also trading at a 13.6 per cent discount, despite delivering strong returns. It is up 43.4 per cent over one year and 110 per cent over five years. But given the nature of investment trust this fund may be more volatile.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average